Westlake Chemical Partners Lp · NYSE:WLKP
Westlake Chemical Partners Lp — Westlake — Investor Presentation (2022)
38 slides from Westlake Chemical Partners Lp's investor presentation, 2022
Slide 1: Focused Approach to Delivering Value and Growth
Focused Approach to Delivering Value and Growth 1st Quarter 2022
Slide 2: Westlake is a Compelling Investment Opportunity
Westlake is a Compelling Investment Opportunity Strong and experienced leadership with a proven track record of operating 1 excellence, asset allocation, and successful acquisitions and integrations all driving long-term value creation Accelerating profitable growth in Performance & Essential Materi
Slide 3: Westlake Corporation
Westlake Corporation A Leading Global Producer of Products and Materials that Enhance People’s Lives Every Day (LTM Mar 31, 2021) Net Sales (2) $13,447 Million EBITDA (1,2) $ 4,441 Million EBITDA Margin 33 % Net Income (3) $ 2,529 Million A leading global producer of performance oriented and essenti
Slide 4: Diverse Portfolio with Market Leading Positions
Diverse Portfolio with Market Leading Positions Global Scale With Leading Market Positions Epoxy Performance & Essential Materials (PEM) End-Market Diversity #1 Specialty for Wind Energy Performance Materials #2 Specialty for European Aerospace (PVC, Polyethylene, Epoxy) #2 Specialty for N.A. Automo
Slide 5: Westlake’s History of Driving Value Creation
Westlake’s History of Driving Value Creation 1991 1997 2006 1988 Started Petro 1 Acquired Calvert City, Acquired Longview 2013 2014 2016 2019 LDPE Plant Acquired PVC plant Chlor-Alkali plant PE plants Geismar Ethylene Plant Ethylene Plant Geismar Expansion Started Petro 2 Chlor-Alkali Expansion Expa
Slide 6: Sustainability Focus Grounded in Longstanding Values
Sustainability Focus Grounded in Longstanding Values Our CORE VALUES, in place since our founding in 1986, are grounded in socially responsible business practices and continue to be a guiding Sustainable light for our evolving sustainability strategy Products Health, Safety & Environment (“HSE”) Pro
Slide 7: Almost 95% of our products are used for durable, long-lasting goods
Almost 95% of our products are used for durable, long-lasting goods We understand the importance of reducing the environmental impacts of our feedstocks, production and usage, and are developing exciting innovations, together with our customers, to meet their objectives while We guard against our al
Slide 8: 2030 Carbon Emissions Reduction Goal
2030 Carbon Emissions Reduction Goal On February 21, 2022 we officially announced a carbon emissions reduction goal: Reduce Scope 1 & 2 CO2 emission intensity 20% by 2030* To further reduce our carbon footprint, we are allocating “Westlake has been lowering carbon capital to both proven and emerging
Slide 9: Westlake Commitment to Robust ESG Governance
Westlake Commitment to Robust ESG Governance Our Board of Directors had previously delegated sustainability oversight to the Board Board’s Corporate Risk Committee, but more recently amended the Committee We are proud to have received the Oversight charter, changing its name to the Corporate Risk an
Slide 10: HIP Portfolio Overview
HIP Portfolio Overview Business Leading Brands & Product Examples Demand Drivers/Major-End-Markets • Over a decade of underbuilding in U.S. residential housing • Demographics and work flexibility drive housing growth • Repair and remodel spend • Residential housing growth and outdoor living • Demogr
Slide 11: HIP Benefits from Significant Scale and a Long History of Customer Satisfaction
HIP Benefits from Significant Scale and a Long History of Customer Satisfaction Fiscal Year 2022 Consensus Revenue Estimates ($ in millions) Significant growth since 2016 driven by both organic market growth and ~$1,400 strategic M&A Prior to ~$1,400 2016 Leader in PVC Pipe Acquired Royal Building P
Slide 12: Closer to the Customer with Value-Added Name Brands
Closer to the Customer with Value-Added Name Brands Flagship Brands Growth Opportunities US TAM* Market Positions Name Value • Vinyl siding provides lowest installed cost Siding & #1 Non-wood Shutters Brands make up the • Majority is driven by stable R&R spend ~$10B #3 Premium Siding Accessories • S
Slide 13: Demographics Support Favorable Housing Trends
Demographics Support Favorable Housing Trends Secular trends to drive U.S. housing demand growth, which will Annual U.S. Housing Starts (Thousands) benefit Westlake’s Building Products and our PVC businesses: 2,500 Over Decade of Underbuilding Supports Strong Future Demand • Favorable demographics w
Slide 14: Recent Acquisitions Enhance Value-Added Portfolio
Recent Acquisitions Enhance Value-Added Portfolio Enhancements create a significant ability to apply our proven skills towards new growth and return opportunities across both segments Adding Dynamic End Market Applications to Our Value Chain Establishing HIP as a national Expanding capabilities for
Slide 15: Performance & Essential Materials for Everyday Life
Performance & Essential Materials for Everyday Life Market PEM Outperformance vs. Peers Product Demand Opportunities Position 2021 EBITDA Margin • PVC is an integral product for a significant number of 40% housing and construction materials that are short in supply and high in demand #2 Global PVC 3
Slide 16: High Product Integration with a Globally Advantaged Low-Cost Position
High Product Integration with a Globally Advantaged Low-Cost Position End Markets Westlake has long-term All ethane strategic cost advantage: feedstock Ethylene Polyethylene • Flexible packaging capability • Shrink wrap 2.6B lbs • Trash bags North America has a long-term 4.8B lbs Styrene cost advant
Slide 17: Benefitting from Compelling Supply & Demand Dynamics
Benefitting from Compelling Supply & Demand Dynamics 2021 Global Caustic & PVC Capacity Relative Industry Changes in Capacity Compared to World GDP: Global Over/Under Investment PVC Capacity 10% Westlake 5% Both PVC and Chlor-Alkali demand Formosa growth is expected to materially exceed 0% supply ad
Slide 18: Penetrating New End-Markets Through Epoxy
Penetrating New End-Markets Through Epoxy Epoxy at a Glance: Epoxy Market Overview Epoxies expand Westlake’s integrated materials business Global Industry Sales into attractive high-growth innovative and sustainability Sales By: oriented end-use products Other Applications & Products Leadership Posi
Slide 19: Westlake’s Unique LDPE Focus Provides Advantages
Westlake’s Unique LDPE Focus Provides Advantages Westlake’s PE Capacity Breakout LDPE Capacity as a % of Total PE Capacity Commodity Specialty Westlake ~80% Autoclave HDPE LLDPE LDPE Dow Westlake’s PE Mix Of the three types of PE, LDPE has the most specialty applications and Less Specialty & Lyondel
Slide 20: Closer to Customers with Specialty Products & Innovation
Closer to Customers with Specialty Products & Innovation Global R&D Footprint Supporting Product Development Europe United States Product End-use and Applications Specialty PE • Solar cell encapsulant film • Personal care products • Sterile medical packaging Duisburg, Germany (Epoxy) Esslingen, Germ
Slide 21: Specialty & Downstream Product Mix Enhances Margins
Specialty & Downstream Product Mix Enhances Margins Product Market Position Price Advantage (1) (per pound) • Westlake is a leading producer of specialty PVC delivering higher margins and increased earnings stability Avg. Specialty PVC #2 in Global PVC 20.0¢ Specialty PVC Over Commodity • Population
Slide 22: Compelling Portfolio of Growth Opportunities
Compelling Portfolio of Growth Opportunities Chloro-Vinyl Dynamics New Growth Lever With Epoxy LDPE Opportunity • Geismar PVC capacity additions • Trends in wind energy, light • Growing specialty and Essential Materials delivers near-term value weighting, coatings and differentiated PE to drive Perf
Slide 23: Investment Criteria to Drive Growth
Investment Criteria to Drive Growth Strategic Filters Adjacent Improves Disciplined and Enhances Applications and Vertical Integration Buying Below Opportunistic Production and Products in Core Strategy to Replacement Approach to Technology HIP & PEM Further Reduce Costs Acquisition Capabilities Seg
Slide 24: Westlake History of Maintaining A Strong Balance Sheet
Westlake History of Maintaining A Strong Balance Sheet Strong Balance Sheet Cash $1,054M With Significant 1.0x vs. 3.0x Debt maturity life of ~17 years Fully Undrawn Revolver $1,000M Availability to Support compared to peer average of Future Growth and Total Available Liquidity ~$2,054M Net Debt Pee
Slide 25: Westlake’s History of Delivering Strong Financial Results
Westlake’s History of Delivering Strong Financial Results Ten Year CAGR Performance Sales EBITDA Free Cash Flow Per Share Higher Sales, Margins and Returns Attributable to: ~14% ~19% $3.7B ~26% CAGR $11.8B CAGR CAGR $13.57 • Focused Bottom Line Growth • Asset Quality $3.6B • Operating Rate Advantage
Slide 26: Successful History of M&A
Successful History of M&A History of Successful Investment Criteria Focus Integration • Investment below replacement cost Adjacent applications and products in • Expands specialty PE offering Acquisition of specialty 1 core HIP and PEM segments PE from Eastman Chemical • Product integration improvem
Slide 27: Continuing to Allocate Capital Efficiently
Continuing to Allocate Capital Efficiently Recent Capital Expenditures and Acquisitions ($ in millions) • Increases vertical integration • Investments aligned with core ~$3,800 ~$1,200 ~$3,800 strengths driving high returns • Access to new, growing and Acquisitions sustainable markets • Expands capa
Slide 28: Key Takeaways of Westlake’s Compelling Story
Key Takeaways of Westlake’s Compelling Story Performance & Essential Materials (PEM) is a leading producer of products that improve everyday life with 1 strong specialty and downstream focus and a profitable growth outlook driven by favorable demand trends and capacity expansions Housing & Infrastru
Slide 29: Westlake
Vestlake
Slide 30: Appendix
Appendix Westlake
Slide 31: Importance to Stakeholders
Material Factors to Westlake We engaged a third-party leading research firm to 1 Process Safety + Emergency Response perform a materiality Materiality Matrix 2 Value Generation + Distribution 5 assessment for Westlake 3 Health + Safety in 2021. The materiality 4 Competitiveness + Reliability assessm
Slide 32: Reducing Our Environmental Impact
Reducing Our Environmental Impact CO2e Emission Rate CO2 reduction (ton CO2e per ton production) progress to date 0.6 We are making progress to decrease our environmental footprint across multiple areas of focus* Scope 2 emissions are indirect GHG emissions NOx Emission Rate (tons) 28.6% associated
Slide 33: Performance & Essential Materials Overview
Performance & Essential Materials Overview Performance Performance vs. Essential ~$9.7B Chlorovinyls Sales Materials & Consumer Applications #1 Global Combined Chlorovinyls LTM 1Q ~ 30% Revenue (LTM 1Q 2022) 2022 #2 Global Chlor-Alkali #2 Global PVC • Housing, Construction & ~70% PVC #2 Global Speci
Slide 34: PEM has a Long History of Strategic & Profitable Growth
PEM has a Long History of Strategic & Profitable Growth Key Expansion Events 50,000 Performance Essential • Expanded Ethylene Capacity (2013, 2014, 2016, 2017) 40,000 Total Capacity (millions of lbs.) • Expanded PVC Capacity (2013, 2014, 2019, 2020) ~15% 30,000 CAGR • Expanded Chlor-Alkali Capacity
Slide 35: Leading Scale, Vertical Integration with Globally Advantaged Low-Cost Position
Leading Scale, Vertical Integration with Globally Advantaged Low-Cost Position Drives Chlorovinyl Margin Support Westlake benefits from its globally Overview of the Chlorovinyls Chain competitive cost position and integrated production footprint as the world’s largest chlorovinyls manufacturer Chlor
Slide 36: Housing & Infrastructure Products Overview
Housing & Infrastructure Products Overview Housing N.A. Building Products Sales Breakout ~$3.7B Sales LTM 1Q Description #1 Premium PVC & Poly-ash Trim #1 Non-wood Shutters 1-step distribution vs. Construction vs. 2-step distribution Remodel Revenue (LTM 1Q 2022) 2022 #3 PVC Siding #3 Premium Siding
Slide 37: Reconciliation of Westlake EBITDA to Net Income and Cash Flow from Operating Activities
Reconciliation of Westlake EBITDA to Net Income and to Cash Flow from Operating Activities (in $ millions) LTM Q1 2022 FY 2021 FY 2020 2022 Q1 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2020 Q4 2020 Q3 2020 Q2 2020 Q1 EBITDA $ 4,441 $ 3,693 $ 1,247 $ 1,301 $ 1,131 $ 1,078 $ 932 $ 553 $ 386 $ 288 $ 236 $ 337 Le
Slide 38: Safe Harbor Language
Safe Harbor Language This presentation contains certain forward-looking statements including statements regarding future profitable growth in both of our segments, market outlook, margin improvement for all of our products, maximizing shareholder value, housing and infrastructure market trends, sust